Water bosses in pricing probe go quietly

TOP executives at the heart of a regulatory investigation into overcharging at Severn Trent Water are quietly being offered early retirement.

Three senior officials with control of financial and regulatory affairs are to leave on early retirement packages within weeks.

Financial Mail revealed last November that Severn stood accused of giving misleading financial data to watchdog Ofwat to justify massive price rises to its customers.

Parent company Severn Trent Group is expected to announce annual profits of £224.4 million on Tuesday.

The departures of the heads of both regulatory and financial affairs and another senior manager are the latest in a string of early exits at the group.

Last year, chairman David Arculus and chief executive Bob Walker left. Arculus is now chairman of mobile group O2 and the Better Regulation Taskforce. Walker became chairman of troubled High Street retailer WH Smith in February.

It is unusual for the chairman and chief executive of a company to leave within 12 months. The managing director of Severn Trent Water, Brian Duckworth, also departed last August. However, Mark Wilson, the head of finance and regulation at Severn Trent Water since 1995, was promoted to the main group board last September.

Whistleblower David Donnelly said last November that his initial complaints appeared to have been sidelined and he was concerned Ofwat wanted to play down the problems for fear of seeming duped.

Donnelly, a financial expert at the group who has asked Financial Mail not to name those involved below main board level, said he was forced to change forecasts to help the company 'fix' vital regulatory submissions.

After Financial Mail's expose, the company admitted to problems and confirmed that it was conducting a disciplinary inquiry into conduct that it admitted 'fell short of the behaviour expected' of its executives. Investigations by the company and Ofwat continue.

But Donnelly said: 'I fear Ofwat does not have the information it needs and am concerned that executives at the centre of the concerns I raised are being paid off and leaving before the investigation is concluded.'

Donnelly is furious that despite complaining that Severn Trent Water had exaggerated bad debt levels to justify price rises, he had not been shown the report into his allegations compiled by accountant PricewaterhouseCoopers.

Severn Trent said there was 'no linkage' between the retirements and the inquiry. An Ofwat spokesman said it had the powers it needed to carry out the inquiry.